The prime minister said the changes he was outlining would not bring a quick end to boat arrivals - in fact it could stir the people smugglers to test Australia's resolve.

He also attempted to inoculate Labor against the inevitable implementation problems - telegraphing there'd be bumps in the road.

The Coalition welcomed the PNG deal but said Labor would not be able to implement it.

Rudd was good at talking but not good at doing, Tony Abbott told reporters.

The Greens expressed total horror, declaring it a black day for refugees.

That's it for now. We'll be back with politics live as events dictate.

Until then, have a great weekend.

Updated at 10.19am BST

10.02am BST

Before we wrap tonight - news from my colleague, Bridie Jabour - the situation in Nauru:

A riot involving 150 asylum seekers has broken out in Nauru detention centre. The department of immigration has confirmed security and police have been called to break up a disturbance but at 7.45pm AEST had not yet got it under control.

A spokeswoman for the department said there are reports of injuries. “It is very early stages so we do not want to speculate,” she said.

She said 150 detainees in the centre - which houses only single males - were involved in the “non-compliance behaviour”.

Reports of the riot began before the prime minister’s new asylum seeker policy announcement and it is not believed the two are linked.

And some analysis from another colleague Oliver Milman on the question of legality and the international convention.

In all, Rudd's plan does not appear to sit comfortably with the content and tone of the convention.

9.57am BST

Stephanie Philbrick, on Twitter. Voicing the thoughts of many participants in the discussion on social media this afternoon.

It really is incredible, this package, when you think of where Kevin Rudd started on this issue in 2007: his desire to take apart John Howard's harsh deterrence measures, (then an electoral plus, being humane in this policy space.)

And when he declared to the leadership plotters in 2010 that Labor should not lurch to the right on this issue. That was Kevin Rudd, declaring that - the very same person who today told voters that people arriving by boat would not end up in this country.

This is a sprint to the right, not a lurch - there is no doubt about it.

But today is a very Rudd solution: lots of bilateral and multilateral diplomacy, a lash of 'me too' politics, big flashy announcement, and precious little fine print.

Back to the future in all but sentiment.

9.36am BST

Huge social media response - so many of you watching today.

Joshua Healy (@youralarmbells)

.@murpharoo neutralises a major electoral advantage for the coalition, but betrays a callous indifference/xenophobia toward #asylumseekers

JOURNALIST: Why won't you tell us what the cost is now and how you will pay for it?

KEVIN RUDD: Can I say we will undertake this with an absolute application to discipline, that this will be budget neutral. That is the commitment the Australian people want me to give to them. That's the commitment I am giving to them. In terms of the finalisation of those arrangements which fall currently within or outside the aid budget, then we'll make a full statement in due course and the finance minister will do so.

9.31am BST

Rudd on those still unspecified costs. Australia's aid budget will deal with commitments to PNG on health funding, funding for universities and policing.

And the processing measures?

Rudd:

Other (costs) will, of course, need to be dealt with in a different way.

On the question of the overall impact on the budget of asylum seekers in general, at present, because the numbers are going up and up and up, this is a huge burden to budget.

What we're on about here is a new arrangement which actually will send a very clear message to people smugglers with the objective of reducing the number over time and therefore, with less call on the budget.

So for us, those budgetary arrangements are important.

Very important.

But a complete mystery.

9.19am BST

PNG prime minister Peter O'Neill on today's agreement:

Papua New Guinea was asked, by the then government in 2006, to establish a processing centre in Manus. In 2011 of course, the then government, the Gillard Government, asked us to reopen that facility.

We have insisted since we came into government that we wanted to establish a permanent regional processing centre. Today's regional resettlement program is one that we believe will resolve many of those issues we have brought forward to the Australian government.

That is why I want to thank the prime minister of Australia Kevin Rudd and of course the government for their initiative to try to accommodate our wishes to establish a regional processing centre and a regional resettlement scheme that has now been announced today.

Papua New Guinea as a country, it might not be widely reported, but we also have our own refugee issues. For many years, over tens of thousands of refugees in our country.

I believe that the processing centre and the resettlement arrangement, that we're now forging, will enable us to have an orderly process in those people who are seeking genuine citizenship of other countries in the region.

And that is why we agreed to a resettlement program where we believe strongly that genuine refugees can be resettled in our country and within the region in the years to come. I also want to say this: an annual review will take place in these arrangements.

So as prime minister Rudd has stated earlier, it is not going to be easy. But of course Papua New Guinea is blessed with lots of land mass and a very small population.

There is enough assistance that we can give to the Australian government in handling this issue of the refugees that the Australian government is facing.

So once again, thank you very much for asking us to join you in this major announcement. We look forward to working with the Australian government in the Australian government in the near future and making sure this resettlement program works for our community in the Pacific region.

Kevin Rudd today on stopping the boats - will this policy change stop the boats:

I want to level with the nation by saying the boats are not going to stop coming tomorrow.

In fact it is more probable that the people smugglers will try and test our resolve for the period ahead.

It is important to look how measures such as this work in the months and years ahead.

8.40am BST

Abbott points out that this afternoon's announcement is very light on detail. The opposition leader will be briefed shortly by Peter O'Neill.

Abbott:

I am full of gratitude to the PNG government for their willingness to assist.

He has questions:

What will all this cost?

How long will it take to construct fully functioning processing centres in PNG?

Abbott:

(Kevin Rudd) is very good at making announcements but he's hopeless at implementing a policy.

8.33am BST

The opposition leader has called a press conference to share his first thoughts.

Tony Abbott:

I welcome it, but it won't work under Mr Rudd. Who do you trust on this subject? Who do you trust to stop the boats?

Abbott says its a plan for processing and resettlement, it is not a plan to stop the boats.

8.30am BST

More detail from Labor's announcement.

Rudd said Australia would continue to look at current visa arrangements with countries in the region. He noted the changes Indonesia has already foreshadowed concerning visa arrangements for Iranians passing through Jakarta en route to Australia.

He flagged there would be further work done on Australia's system for determining whether people were genuine refugees - Rudd signalled current procedures would be benchmarked against the rest of the world, and could be subject to change.

Rudd said he will consider boosting the current humanitarian program if the RRA with PNG works, and if there is progress achieved at the regional level.

He said the government was "fully mindful" of the UNHCR's recent criticism of conditions on Manus Island - he said the criticisms would be worked through.

He said Australia would provide resettlement resources to PNG to ensure people were properly treated.

8.19am BST

Greens leader Christine Milne looks furious.

She's called a press conference to react to today's announcement.

Absolutely hardline, Senator Milne says of Labor's policy, and from a man who declared he would not lurch to the right on the management of asylum seekers.

PNG can't deal with this problem she says. It's a country with profound economic and social problems.

Milne:

This is a day of shame for the nation.

Updated at 8.31am BST

8.16am BST

Some other points of detail:

The resettlement arrangement (the RRA) with PNG is for 12 months.

PNG is a signatory to the UN refugee convention.

Under today's changes, if people are found not to be genuine refugees, they will either be sent home, or to a "safe" third country.

The RRA with PNG has no cap on the number of arrivals that can be sent for processing or settlement.

Australia will continue the current offshore processing arrangements with Nauru.

Rudd says this arrangement is within the scope of the international convention.

Rudd spoke today to the UN secretary-general to inform him Australia would be convening an international conference within the framework of the convention to improve the current system for dealing with refugees.

This convention, the prime minister said, would look at the adequacy of processing centres around the world, and examine burden sharing.

8.01am BST

Peter O'Neill says this objective of this policy is to stop the boats. He says he hopes no-one will be coming to Manus Island.

Rules to apply to boats arriving from now on

Burke says he's removed some people from Manus Island because the conditions there currently are not up to standard. Those conditions are being addressed, he says.

Attorney-general Mark Dreyfus says this arrangement is entirely in accordance with Australia's national and international legal obligations.

Dreyfus:

This arrangement will be in entirely in accordance with Australia's international and domestic law obligations. Papua New Guinea is of course a signatory to the refugees convention and, as has been indicated by both prime ministers, Papua New Guinea is going to withdraw the reservations that it had to the refugees convention in respect of people who are to be transferred from Australia. What that means is that all people transferred to Papua New Guinea will have the full benefit of the rights that come to them under the refugees convention. Papua New Guinea will be conducting the processing and, of course, as is appropriate under the refugees convention, it will carry with it for all those who are assessed as being genuine refugees, the right to potentially resettlement in Papua New Guinea.

Rudd says the costs of this intervention will be revealed by the finance minister in due course. He says it will be budget neutral.

This is a clear and undliuted message to every people smuggler in the world, Rudd says: your business model has been undermined. It will be bumpy and rocky for a while. But this is a clear change in strategic direction.

Updated at 10.28am BST

7.53am BST

Rudd says the changes he's outlining today will be criticised on the left and on the right.

He says the measures will not be effective immediately in stopping boats. He says he expects the people smugglers will test Australia's resolve.

He says it will be costly. He says the implementation of this agreement with PNG will not be smooth.

There will be problems. That is inevitable.

Updated at 8.03am BST

7.50am BST

The prime minister's statement

Here is the full statement from Kevin Rudd:

As of today asylum seekers who come here by boat without a visa will never be settled in Australia.

Under the new arrangement signed with Papua New Guinea today – the Regional Settlement Arrangement - unauthorised arrivals will be sent to Papua New Guinea for assessment and if found to be a refugee will be settled there.

Arriving in Australia by boat will no longer mean settlement in Australia.

Australians have had enough of seeing people drowning in the waters to our north.

Our country has had enough of people smugglers exploiting asylum seekers and seeing them drown on the high seas.

We are sick of watching our servicemen and women risking their lives in rescues in dangerous conditions on the high seas.

Regional processing arrangements in Papua New Guinea will be significantly expanded and people will be sent to Manus Island as soon as health checks are complete and appropriate accommodation is identified.

PNG officials will assess their claims on Manus Island.

Our governments will expand existing facilities on Manus Island, as well as establishing further facilities in Papua New Guinea.

There is no cap on the number of people who can be transferred to Papua New Guinea.

The Australian Government, in partnership with the PNG Government, will support settlement services for those with refugee status, as safe and appropriate accommodation and services are identified.

We are a compassionate nation and we will continue to deliver a strong humanitarian program.

If the measure announced today and the international meeting on the Convention that has been flagged lead to a significant change in the number of people arriving by boat, then the Government stands ready to consider progressively increasing our humanitarian intake towards 27,000 as recommended by the Houston Panel.

There is nothing compassionate about criminal operations which see children and families drowning at sea.

Access to our humanitarian program must be through the international organisations which resettle people around the world, not through criminal operators who have pushed people onto unseaworthy vessels with tragic consequences.

The new arrangements will allow Australia to help more people who are genuinely in need and help prevent people smugglers from abusing our system.

The people smugglers themselves are constantly changing the way they operate and we need to be flexible enough to anticipate and match their actions to avoid the terrible consequences of this trade.

No doubt there will be some people smugglers who now encourage asylum seekers to test our resolve.

Be in no doubt. If people are paying thousands and thousands of dollars to a people smuggler they are buying a ticket to a country other than Australia.

7.46am BST

Australia will continue to take humanitarian applicants through orderly international channels. Rudd says Australia will continue to take large number of refugees.

7.43am BST

In essence, people who arrive by boat will be taken to Manus Island (or other offshore facilities) for processing - and if found to be a genuine refugee, they will be resettled in PNG.

Not here.

Rudd:

I understand this is a very hardline decision.

7.40am BST

Rudd thanks O'Neill for flying to Brisbane for the announcement.

Any asylum seeker who arrives in Australia by boat will have no chance of resettlement here.

7.37am BST

Kevin Rudd with the details of Labor's shift on boats and border protection

The prime minister has arrived to address reporters in Brisbane. He's with the PNG prime minister Peter O'Neill, and several ministers.

There are two documents being signed.

A new agreement on health and law and order.

And

a regional resettlement arrangement between Australia and PNG.

7.25am BST

Refugee lawyer and advocate David Manne - no fan of conditions on Manus Island.

The vessel was initially detected by a RAAF maritime patrol aircraft, operating under the control of Border Protection Command.

Customs and Border Protection will transfer the people to Australian Government authorities on Cocos (Keeling) Islands, where they will have basic health and security checks. The Department of Immigration and Citizenship will then make arrangements for them to be transferred to Christmas Island, where they will undergo further security, health and identity checks and their reasons for travel will be established.

6.17am BST

The ABC's correspondent in Papua New Guinea, Liam Cochrane, is doing a live cross on News24 at the moment to confirm the Manus Island detention centre will be expanded to house 3,000 asylum seekers.

Politicians in PNG are speaking to reporters in Port Moresby ahead of the looming announcement in Brisbane.

Rudd will be joined in Brisbane by the PNG prime minister Peter O'Neill. There have been news reports this afternoon foreshadowing a boost to Manus based on comments from MPs in PNG.

5.53am BST

The latest advice from Kevin Rudd's office is people are in position for the policy announcement.

Still no confirmation as to time.

Kevin Rudd's election campaign in 2007 was dubbed "hurry up and wait" by some wags. This was a reference to Rudd's tendency to hustle the media into position, then make them wait for further particulars. And wait. And wait.

The more things change, the more .. well .. you can fill in the blanks.

5.40am BST

In the trade this is called a double no.

The shadow treasurer Joe Hockey on FBT.

Joe Hockey (@JoeHockey)

We oppose and will not introduce Kevin Rudds flawed FBTtax grab. 10,000 car orders frozen and jobs gone and more going.#krudd can't govern!

Given this was a saving to the budget worth $1.8 billion, the Coalition was keeping its options open on banking this measure (while reserving its right to criticise it.) The major parties both need credible savings measures to fund election policies.

Opposition says no on Labor's FBT change

The Coalition has just announced it will not proceed with Labor's proposed change, announced this week, to fringe benefits tax.

(Kevin Rudd as part of budget savings measures associated with adopting a floating carbon price one year earlier than legislated announced a rule change for FBT. Labor's FBT rework has gone down like a lead balloon with the car industry, and people who want to claim business use for their vehicle without the inconvenience of keeping records.)

Tony Abbott has issued a statement.

The Coalition does not support Labor’s $1.8 billion hit on the car industry. If elected, a Coalition government will not proceed with these changes.

Labor’s tax hike will cost 320,000 Australians an average of $1,400 per year. The decision, made without any consultation, has already damaged the car industry.

Labor has offered no proof for their claims about rorting of the FBT arrangements. Instead, it appears to be yet another Kevin Rudd rush-job.

Updated at 5.31am BST

5.20am BST

Guardian Australia's resident political numbers man, Simon Jackman, was another poll person pondering the currency of Malcolm Turnbull this week.

Labor and the Coalition continue to poll in the neighbourhood of 50-50, two-party preferred. The 2013 election is shaping up as a genuinely close affair.

Does the Coalition have to consider the unthinkable? Does Malcolm Turnbull offer them a better chance at victory against a resurgent, Rudd-led, Labor party?

The betting markets are certainly toying with the idea. Turnbull’s price in the Liberal leader markets was in to the $4.5 to $6 range this week, after spending the last few months at $7 to $8 or higher. Tony Abbott, of course, remains the firm favourite to lead the Coalition to the election, although the probability of this event implied by the betting prices has fallen to the 69% to 76% range in recent days.

What’s going on? And could, or should, the Coalition be thinking the unthinkable?

5.04am BST

Liberal frontbencher Malcolm Turnbull also did well in the ReachTel survey.

Participants in the poll were asked for their voting intentions if Turnbull, and not Tony Abbott, was leader of the Liberal Party.

ReachTel produced a two party preferred number of Labor 42% and Coalition 58% if Turnbull was the opposition leader.

ReachTel asked: Which of the following do you think would make the better Prime Minister?

The PNG prime minister Peter O'Neill said this of the UNHCR critique of the processes on Manus Island.

We will look into the details of it. Of course we just reopened the Manus facilities. We are rebuilding the permanent structure there. We need to establish a permanent regional processing centre. We appreciate the UNHCR report and the recommendations and we hope they understand the challenges we have building a permanent solution to this problem.

Given Kevin Rudd's visit to PNG at the start of the week, and the clear hints that Australia will look to do more with PNG as part of a regional solution on boats and border protection, there's lots of focus on Manus Island - and on PNG as a destination not only for processing but for resettlement.

A couple of stories from earlier in the week might be interesting to readers in the event you missed them.

And this one from Paul Farrell, Luke Bacon, Lawrence Bull and Oliver Laughland:

The committee set up to oversee detainee processing times on the Manus Island immigration detention facility has never met, in direct breach of Australia's deal with the Papua New Guinea government, a freedom of information request has revealed.

The joint committee was created, in part, to ensure proper treatment of asylum seekers housed in the centre. It is supposed to include representatives of the PNG and Australian governments and meet once a month. It was the only oversight body set up under a deal forged between the two governments in September and was meant to monitor the treatment of detainees and the length of their stay on Papua New Guinea.

Responding to a freedom of information request which asked for details of the committee's meetings, the Department for Immigration and Citizenship (Diac) conceded that no documents existed as the committee had never met.

4.13am BST

Here's a little more of Abbott, who is still in Queensland.

If Labor moves in line with expectations this afternoon, if it announces more offshore processing and resettlement of asylum seekers overseas, what would the Coalition do?

JOURNALIST: What are your thoughts specifically about the idea of resettling – process refugees overseas?

TONY ABBOTT: Well I’ll wait and see what the government comes up with, but this is a problem that Mr Rudd created. It’s now up to Mr Rudd to take urgent, decisive action actually to stop the boats and he keeps saying that he doesn’t like three-word slogans. Well if he’s not going to stop the boats, what is he going to do? What is he going to do? At the moment, all he’s doing is servicing the boats and that’s not a smart thing for a country like Australia.

JOURNALIST: But has the Coalition considered this very same option?

TONY ABBOTT: What we have been proposing all along and you’ve had the same strong team and the same clear plans from the Coalition for the last three years – what we’ve been proposing all along, temporary protection visas to deny the people smugglers a product to sell, rigorous offshore processing, not just the half-hearted processing that we’ve had from the current Government. The willingness to turn boats around where it’s safe to do so and much better relations with countries like Indonesia.

4.08am BST

The oppositon leader Tony Abbott has been out ahead of Kevin Rudd's policy shift, trying to define the terms of political success, or otherwise.

This policy shift from Labor must contain verbs.

Tony Abbott:

The public are sick of talk, sick of endless meetings, what they want is firm action.

3.56am BST

First it was terminating a carbon tax (that was in fact not a tax but a fixed price .. but let’s not quibble.) Today - with the federal election just around the corner - Kevin Rudd plans to share his plans for overhauling Labor’s policy on boat arrivals.

Thanks for joining our live coverage of the prime minister’s announcement, expected early this afternoon. We’ll report the changes he outlines today and follow through with reaction.

Given we are about to be overtaken by events, we won’t do as we normally do, post a full summary of the political news stories today.

But a couple of resources might be helpful to readers seeking something a bit more substantial than talking points of the moment.

The prime minister has over the past few days telegraphed a renewed diplomatic process revisiting the refugee convention. If you need particulars, The Conversation published this backgrounder yesterday on the United Nations Convention Relating to the Status of Refugees.

Here’s an excerpt:

The convention was drafted as a response to the displacement of millions of people by World War Two and the refusal of many nations to take in Jewish refugees escaping the Holocaust. It is designed to ensure no country ever turns its back again on vulnerable groups who need to escape persecution. Australia ratified the convention in 1954. The most important feature of the convention is that it defines a particular group of people as “refugees” and obliges countries who have signed the convention to give such individuals certain rights. A “refugee” is a person outside of their own country who fears persecution because of their race, nationality, membership of a particular social group or political opinion.

Rudd has emphasised that a solution to this issue is regional as well as local.

Reports this morning indicate that Indonesia is already on the move, agreeing to an Australian request to make it harder for Iranians to enter the country on short term visas. (Indonesia is a key transit point for Iranians planning to journey on to Australia.) Indonesia will host a summit on people trafficking and border protection in mid to late August.

Breaking news reports are pointing to a key role for Papua New Guinea in today’s announcement by Labor. Readers will remember that the prime minister visited Port Moresby at the start of this week.

Two news sources are valuable as we kick off today’s live coverage.

I’d point you to Guardian Australia political editor Lenore Taylor’sscene setter which raises a throw forward point - if today’s announcement by Labor is much more “enhanced screening” (a mechanism to send some boat arrivals straight home, or if that’s not possible, to processing offshore) then will that policy change be open to legal challenge? Labor’s “Malaysia Solution” had a rough trot in the High Court.

And just because it was a very good summation of the week in politics, I would draw the attention of politics live readers to Laura Tingle’s weekly column in The Australian Financial Review this morning. It’s paywalled, but subscribers can read it in full.

The key Tingle quote from the perspective of today is this:

The political attraction of an emotive appeal to Australian xenophobia seems to have us unable to break from making asylum seeker policy the biggest issue in our political debate, even when the reality is both parties’ policies have morphed to within a millimetre of each other, and both sides have a vested interest in reaching a bipartisan position on the issue. There is a broader point too. Whatever you think about the asylum seeker issue, is it really the most pressing issue on which our political class should be tested at this election?

I think this issue entirely overblown - but I’m not the voter the major parties are intent on talking to with this particular issue.

Polls show a great many Australians are troubled by boat arrivals. Labor MPs are of the view that this issue has been killing Labor politically in the outer suburbs, the place where federal elections can be won and lost.